1MDB quizzed on loan to PetroSaudi
S PathmawathyPublished: Nov 22, 2011 11:34 AM | Updated: Nov 22, 2011 11:37 AM
1Malaysia Development Berhad’s (1MDB) moneylending to a relatively unknown international firm is being probed by the Public Accounts Committee (PAC), as the agency’s actual role is to channel in foreign investment and strategic partnership.
1Malaysia Development Berhad’s (1MDB) moneylending to a relatively unknown international firm is being probed by the Public Accounts Committee (PAC), as the agency’s actual role is to channel in foreign investment and strategic partnership.
PAC deputy chairperson Tan Seng Giaw (left) told reporters that the two-hour meeting today focussed on 1MDB’s US$1 billion (RM3.5 billion) investment in a joint-venture with PetroSaudi International Ltd.
“It is something like US$1 billion and we give it to this company and we are not investing but giving it as a loan to them. Can you beat that?
“It is supposed to be 1Malaysia Development Berhad, but this looks like it is 1Malaysia Pinjaman (loan) Berhad!” he exclaimed.
1MDB was summoned today to answer alleged discrepancies in its business dealings with PetroSaudi, specifically into its joint-venture - 1MDB PetroSaudi Limited.
Opposition Leader Anwar Ibrahim, in June, questioned 1MDB’s dealings with PetroSaudi, saying that IMDB disposed of investments in its joint venture with PetroSaudi barely five months after the strategic partnership was inked.
Anwar then asked the Parliament’s PAC dig up the details 1MDB's RM3.5 billion investment in 1MDB PetroSaudi Ltd and the subsequent RM4.1 billion sale back to PetroSaudi International, recording a profit of RM615 million.
However, it was revealed today that the RM4.1 billion (which translates into US$1.2 billion) was in fact converted into a loan to PetroSaudi.
“The basic problem is (1MDB) has invested in PetroSaudi, which has an office in Cayman Island, which has existed since 2005 but we don’t know what sort of company it is (and) how reliable it is,” said the Kepong DAP MP.
However, 1MDB chief executive officer Shahrol Halmi, who was accompanied by the Economic Planning Unit’s (EPU) Rahamat Bivi Yusoff, was not able to provide a “complete explanation” on the matter, said Tan.
“But they promise to give some of the documents, they said some are confidential... (but we need them) because we don’t know how reliable it (PetroSaudi) is. It is using our money.”
Why is 1MDB lending money?
PAC chair Azmi Khalid also pointed out 1MDB’s purpose was to drive investment, bring in new technology and strategic partnership.
“Bearing on the objective stated we want to see where they are going. The US$1 billion invested in PetroSaudi has not brought them losses... their investment value had increased and gave dividends. First it was investment then it was turned into a loan,” said Azmi, who is the Padang Besar BN MP.
According to a PAC source, the 2009 investment was converted into a loan, that promised an earning of 8.67 percent interest annually, approximately US$104 million for 11 years, with a corporate guarantee from PetroSaudi.
The source said 1MDB explained the decision to convert the investment into a loan was due to “other priorities” at hand.
“The aspect of the deal is - the original aspect was 40/60 where 1MDB takes 40 percent and PetroSaudi takes 60 percent.
“1MDB invested US$1 billion and PetroSaudi injected US$1.5 billion, but in this case PetroSaudi’s US$1.5billion was an injection of assets,” he further revealed.
A chunk of the PetroSaudi’s assets included “a potential oil field in Turkmenistan”. However, the 1MDB partner confessed to have never visited the site.
“But the oil field - is it worth US$1.5 billion? They have alleged that they have independent financial reports to say that they are worth at least or more than US$1.5 billion.
“They couldn’t answer if these were high risk oild fields project or proven reserve projects which is why we asked for the documents,” added the source.
Among others, the 1MDB representatives were also vague on providing the committee with PetroSaudi’s financial and investment portfolio.
“They showed us some press cuttings about how strong there are. I mean how can you investment US$1 billion and not know who your investment partner is? The gist of what they said is that the auditors are fine with it so we should take the auditor’s word for it,” said the source.
However, 1MDB has been informed to submit the relevant documents to the committee.
“Even if PetroSaudi is indeed a very strong company - since when it is 1MDB’s mandate to become a moneylender?
‘The role of 1MDB is not to lend money and give interest in returns, even if the interest is profitable, the role of 1MDB is to bring development into Malaysia not become a moneylender and more so to foreign entity which is of unknown origins,” added the source.
PAC deputy chairperson Tan Seng Giaw (left) told reporters that the two-hour meeting today focussed on 1MDB’s US$1 billion (RM3.5 billion) investment in a joint-venture with PetroSaudi International Ltd.“It is something like US$1 billion and we give it to this company and we are not investing but giving it as a loan to them. Can you beat that?
“It is supposed to be 1Malaysia Development Berhad, but this looks like it is 1Malaysia Pinjaman (loan) Berhad!” he exclaimed.
1MDB was summoned today to answer alleged discrepancies in its business dealings with PetroSaudi, specifically into its joint-venture - 1MDB PetroSaudi Limited.
Opposition Leader Anwar Ibrahim, in June, questioned 1MDB’s dealings with PetroSaudi, saying that IMDB disposed of investments in its joint venture with PetroSaudi barely five months after the strategic partnership was inked.
Anwar then asked the Parliament’s PAC dig up the details 1MDB's RM3.5 billion investment in 1MDB PetroSaudi Ltd and the subsequent RM4.1 billion sale back to PetroSaudi International, recording a profit of RM615 million.
However, it was revealed today that the RM4.1 billion (which translates into US$1.2 billion) was in fact converted into a loan to PetroSaudi.
“The basic problem is (1MDB) has invested in PetroSaudi, which has an office in Cayman Island, which has existed since 2005 but we don’t know what sort of company it is (and) how reliable it is,” said the Kepong DAP MP.
However, 1MDB chief executive officer Shahrol Halmi, who was accompanied by the Economic Planning Unit’s (EPU) Rahamat Bivi Yusoff, was not able to provide a “complete explanation” on the matter, said Tan.
“But they promise to give some of the documents, they said some are confidential... (but we need them) because we don’t know how reliable it (PetroSaudi) is. It is using our money.”
Why is 1MDB lending money?
PAC chair Azmi Khalid also pointed out 1MDB’s purpose was to drive investment, bring in new technology and strategic partnership.
“Bearing on the objective stated we want to see where they are going. The US$1 billion invested in PetroSaudi has not brought them losses... their investment value had increased and gave dividends. First it was investment then it was turned into a loan,” said Azmi, who is the Padang Besar BN MP.
According to a PAC source, the 2009 investment was converted into a loan, that promised an earning of 8.67 percent interest annually, approximately US$104 million for 11 years, with a corporate guarantee from PetroSaudi.
The source said 1MDB explained the decision to convert the investment into a loan was due to “other priorities” at hand.
“The aspect of the deal is - the original aspect was 40/60 where 1MDB takes 40 percent and PetroSaudi takes 60 percent.
“1MDB invested US$1 billion and PetroSaudi injected US$1.5 billion, but in this case PetroSaudi’s US$1.5billion was an injection of assets,” he further revealed.
A chunk of the PetroSaudi’s assets included “a potential oil field in Turkmenistan”. However, the 1MDB partner confessed to have never visited the site.
“But the oil field - is it worth US$1.5 billion? They have alleged that they have independent financial reports to say that they are worth at least or more than US$1.5 billion.
“They couldn’t answer if these were high risk oild fields project or proven reserve projects which is why we asked for the documents,” added the source.
Among others, the 1MDB representatives were also vague on providing the committee with PetroSaudi’s financial and investment portfolio.
“They showed us some press cuttings about how strong there are. I mean how can you investment US$1 billion and not know who your investment partner is? The gist of what they said is that the auditors are fine with it so we should take the auditor’s word for it,” said the source.
However, 1MDB has been informed to submit the relevant documents to the committee.
“Even if PetroSaudi is indeed a very strong company - since when it is 1MDB’s mandate to become a moneylender?
‘The role of 1MDB is not to lend money and give interest in returns, even if the interest is profitable, the role of 1MDB is to bring development into Malaysia not become a moneylender and more so to foreign entity which is of unknown origins,” added the source.
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